Just because you're paranoid, it doesn't mean they're not out to get you. Conspiracy theories abound – not least the one that says how much it would suit the FSA if the current crisis in the professional indemnity insurance market drove lots of smaller IFAs out of business and forced the rest to be consolidated.
Have you been consolidated recently? There are lots of folks out there who are keen to persuade you that it is the best thing to do and, in many ways, they could be right.
In these tumultuous times, the idea of throwing in your lot with other like-minded IFAs, gaining access to capital, sharing a brand and sharing best practice is attractive. If at the same time you can create the opportunity to extract capital value from your business at some stage in the future, then it becomes a very appealing proposition.
Certainly, it sounds a lot more attractive than being owned and controlled by a major life insurer. Aside from the money – not to be sneered at, given the prices that have been paid – the idea that product providers can make a better job of running IFA businesses than IFAs really does sound like a triumph of hope over experience.
Still, if we add to the PI shambles the current state of the markets, the growing storm around precipice bonds, the low-cost endowment debacle rumbling along and the continuing uncertainty around the future regulatory landscape, IFAs can perhaps be forgiven for feeling that this is their darkest hour for a very long time.
I am more optimistic. The tide is already turning. Whatever the short-term pressures, there is no doubt at all in my mind that the demand for face-to-face advice already exceeds by a very substantial margin the capacity of the market to supply that service.
Whatever the irritation caused by endowment clients who have been wound up to complain by a well-meaning but entirely misguided Consumers' Association, there's no doubt that customers generally value highly the service they get from their adviser.
It does seem, too, that the tireless efforts of Paul Smee and others have led to a better understanding within the FSA and Government on at least some of the issues.
I suspect that the Government and the regulator probably both now understand that the widespread provision of face-to-face advice is the only way in which any serious inroads can be made on the task of rebuilding the savings ratio.
They understand, too, that the existing regime of highly-regulated advice cannot work cost-effectively in the mass market. The evidence to support that contention is overwhelming, not least the reduction in the number of tied advisers from around 150,000 in the early 1990s to perhaps one-third of that total today.
What is emerging is a more pragmatic approach to the mass market – a combination of product regulation (the Sandler suite) together with lighter regulation of the persuasion process. That leaves the IFA community free to focus on the more well-heeled clients for whom being persuaded to purchase simple products is not the answer. They need the bespoke advice-giving process that only an IFA can provide.
Those IFAs who weather the current storm, who are clear about their target markets and who work hard to equip themselves to provide an exemplary service to that target market will not only survive – they will prosper.
There is no doubt that, in the end, market forces will prevail despite the intervention of the regulator and the Government. If the demand for face-to-face advice cannot be met by the market at the current price, then the price for that advice will go up one way or another.
In the meantime, remember your dog Latin – Noli illegitimi carborundem.
Tony Kempster is a distribution strategist. He can be contacted at email@example.com